Friday, January 16, 2009

Dow 6000? 12,000?

It were not best that we should all think alike; it is difference of opinion that makes horse races.-Mark Twain, The Tragedy of Pudd'nhead Wilson

First up, from Bloomberg:

Dow May Fall to 6,000 Should Low Break, Acampora Says

A decline in U.S. stock indexes below the 2008 lows from November may trigger a rout that pushes benchmark averages to levels not seen since the mid-1990s, according to two leading technical analysts.

“Hopefully we don’t make new lows, because if we do, all bets are off,” said Ralph Acampora, who retired from Knight Capital Group Inc. in October 2007 after four decades on Wall Street. Should the Dow Jones Industrial Average fall below the 7,552.29 it touched on Nov. 20, it might tumble to 6,000, Acampora said. That’s 27 percent below yesterday’s close of 8,212.49 and a level last reached in October 1996.

The lows reached by the Dow average and the Standard & Poor’s 500 Index in November are “a very, very significant area” because they are roughly where the last bear market ended in 2003, said John Murphy, chief technical analyst at StockCharts.com and the author of three books on market analysis. “If that’s broken, it becomes very negative."...

...Acampora, whose career also included decade-long stints at Prudential Equity Group LLC, Smith Barney and Kidder Peabody & Co., said that while the past two weeks are “very disturbing,” he’s still “willing to give it the benefit of the doubt.” He cited the time that has passed since the lows were hit and positive breadth, in which rising stocks outnumber falling ones.

Even if the 2008 lows are not revisited, the market is probably in a trading range comparable to the ones that followed the 1929 crash and the bull market of the 1960s, Acampora said. The Dow average is unlikely to exceed its October 2007 peak of 14,164.53 for at least four years, he said.

Trading Range

After the 1929 crash, the Dow fluctuated between about 100 and 200 until 1950 when it began a sustained move higher. From 1966 to 1982, the average traded between about 600 and 1,000....MORE

"A difference of opinion is what makes horse racing and missionaries."-Will Rogers

From CNBC:

The Dow could reach 12,000 by March as “gloom and doom” creeps out of the market, Ben Lichtenstein, President of Tradersaudio.com, said on "Squawk Box."

“The fundamentals aren’t necessarily stacking up, but again I’m still really looking at 12,000.” Lichtenstein said. “I don’t know if we’re going to hold these levels, I don’t think we’re going to see all times highs necessarily, again the fundamentals are still very negative, but if we can start to turn this around a little bit, the stock market is going to roar right through some of those levels. Again, 9,500 is a major speed bump right now, get above that 12,000 is eminent."...MORE